Monday, January 17, 2022

It's The Housing Shortage, Stupid.


Last week I wrote a post about how ridiculous housing prices have become, not just in Lotusland central but in its more far-flung regions as well. 

To be clear right at the start, I am an old guy who, by virtue of date of birth, is lucky enough to have a house of my own in the city of Vancouver.

So when I think about housing costs it's usually in the context of what my kids and the young folks I work with are up against.

But then I read a UK-focussed piece in today's Guardian from Sam Bowman that got me thinking about something else.

Which is that housing shortages are actually bad for the economy:
"...The UK is not alone in suffering from a housing shortage. The US has the same problem in places such as New York City and the San Francisco Bay area. One study suggested that, if it tackled these shortages, the country could be 8.9% richer; in another the boost to incomes was calculated at 25%.

Applied to the UK, these estimates imply that fixing our housing shortage could add somewhere between £3,000 and £8,500 to the UK’s annual output per person. That would be a huge improvement to living standards..."

In fact, some sharp folks, folks like Matthew Rognlie at MIT, are actually starting to argue that skyrocketing property values are a major driver of the post-war rise in wealth inequality, writ large:
"...Over- all, the net capital share has increased since 1948, but once disaggregated this increase turns out to come entirely from the housing sector: the contribution to net capital income from all other sectors has been zero or slightly negative..."

All of which begs the bigger question, which is, without being crude about it like James Carville once was (see header), how many of our economic and societal woes could be greatly improved if we really dealt with housing inequality?

And, lest you thought I'd forgotten... The irony of opportunists like MarkyMark jumping on this issue to gain short term ballot box traction while simultaneously wooing big dollar developer donors is not lost on me...Not to mention a sudden interest in 'progressive' signaling.



Lew said...

114,000 new homes promised over 10 years back in 2018.

So if 40% of the time has passed, have 45,600 affordable new homes been delivered?

NVG said...

Speaking from the background of building moving, eg. Hastings Mill, there is another way of creating additional housing within the city and it doesn't require the expense of demolishing an existing single family home to create another one or more.

Raise the house one, or two floors off of its EXISTING foundation thereby doubling or tripling the housing.